May 31 (Bloomberg) -- Europe’s financial problems aren’t
confined to Greece and a reorganization of the continent’s
banking system is necessary, Laurence D. Fink, chief executive
officer of BlackRock Inc., said in a Bloomberg television
interview today.

“The European problem is way beyond Greece,” Fink said in
the interview in Hong Kong. “Greece is the most immediate
problem. I find it very difficult to restructure Greece without
the understanding that we’re probably going to have to
restructure Ireland and restructure Portugal.”

Inspectors from the EU, International Monetary Fund and
European Central Bank are set to wrap up a review of Greece’s
progress in meeting the terms of last year’s 110 billion-euro
($157 billion) bailout in coming days. The EU will then
formulate its plan for further aid to Greece, which remains shut
out of financial markets a year after the rescue package.

Many smaller banks in Europe will need to be recapitalized,
said Fink. The largest banks on the continent are well
capitalized, though devaluation of some of the sovereign credit
will put stress on them, he added.

“The banking system in Europe owns all this debt,” Fink
said. “If we restructure one country, we’re now basically
putting huge capital stress on these banks. Before we
restructure any country, we’re going to have to restructure the
banking system in Europe.”

Europe is going to need a “giant TARP,” Fink said,
referring to the Troubled Asset Relief Program that the U.S.
introduced to rescue financial firms. BlackRock advised the
Federal Reserve on illiquid debt portfolios during the height of
the financial crisis.

Building BlackRock

Fink, one of the co-founders of BlackRock which began as a
fixed-income firm in 1988, said he’s more bullish on U.S.
equities than bonds.

Fink, 58, has built the firm into the world’s biggest asset
manager through acquisitions including the purchase in December
2009 of Barclays Global Investors. The $15.2 billion deal, the
largest for BlackRock, added passive funds such as ETFs to
BlackRock’s active stock and bond strategies.

BlackRock manages about $3.65 trillion in assets in its
stock, bond and hedge funds, as well as its iShares exchange-traded funds. The firm’s BlackRock Solutions unit advises
financial institutions and governments around the world on hard-to-value assets. BlackRock this year was picked by the Central
Bank of Ireland to advise on the assets held by six of the
nation’s largest banks.

In 2005, BlackRock bought State Street Research &
Management to add more stock, real estate and hedge funds. In
2006, it expanded its equity business with the purchase of
Merrill Lynch & Co.’s money-management unit. In 2008, BlackRock
acquired a division of Quellos Group LLC to add hedge-fund
assets. The purchase of BGI, the biggest seller of index-tracking ETFs, was the largest to bring together active and
passive funds.